I will elaborate based on my understanding of the travel and hotel distribution ecosystem, after 25 years in this industry working in different capacities.
NB: This is an article from mirai, one of our Expert Partners
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Interestingly my tenure has been divided in 3 different periods, relatively evenly distributed in terms of time, among leading players in different segments:
- OTA: 8 years at Expedia
- Google: 7 years at the leading search engine – focusing on travel solutions
- Hotels: 7 years in hotels/marketingand technology applied to hotels at Iberostar H&R and at Mirai
The experience gathered through these different gigs has procured me a well rounded perspective on the topic.
Introduction
The DMA is a complex law, aiming to solve a complex issue.
Since its inception, it has been very ambitious. Any law that aims to cover a vast, multi faceted and complex issue, like the digital markets, with a blanket approach will, by definition, face many challenges.
Let me start by saying that, in my humble opinion, the DMA regulation is needed and positive for the digital ecosystem. The difficulty stems from its interpretation and finding the right balance for all the stakeholders involved. In the context of this analysis the key stakeholders are:
- The European consumers (travelers)
- The hotels (as advertisers)
- The intermediaries (OTAs and other incumbents)
If we analyze how the travel industry has evolved over the last fifty years, we can conclude that the most dynamic area of the complex and ever-changing ecosystem is distribution. Over a year ago, we published a post on the evolution of travel and the importance of distribution within this industry.
Traditionally, intermediaries (Tour Operators, OTAs, bed banks and other forms of intermediation) have played a key role in distribution, as they controlled demand, that was their key value proposition: access to the traveler.
Since the turn of the century, we have witnessed a revolution in the way travelers and travel suppliers/service providers (hotels, airlines and rent-a-car amongst other stakeholders) have evolved in the way they interact.
Most travel suppliers have developed their ability to understand demand and address it directly. Travelers have understood that the best product offering and purchase experience should be found on the direct supplier outlets (web, contact center or social media) when the incumbent has a clear B2C strategy and adequate levels of investment and focus on the final customer plus the required technology and marketing budgets.
The historic overreliance of the travel supplier community on intermediaries stemmed from the fact that most suppliers did not consider B2C sales and customer knowledge a core competence. Conversely intermediaries made understanding and selling to the traveler their core competence. As a consequence, OTAs like Expedia, Booking and others, became category killers in the travel ecosystem. Their power was financed by travel suppliers commissions on a pay-to-play basis.
Some intermediaries, through laser focus on building supply, precise execution, superb use of technology and marketing, plus incredible customer focus and brand management, have built world class leading distribution platforms. One of the most prominent and successful in its field is Booking.com. No discussion on this.
Only those intermediaries who add value through honest product management operating with transparency and fairness will thrive. This is not always the case.
